Storm Financial Group

[bunyip]

Yes i would blame your broker if you had put in a sell and he didnt put in your sell and you lost everything.
You are all asuming, and making comments on little bits of information. But every Storm client had a different position ie LVR circumstances etc.
You all keep trying to blame Storm Only. Or clients. Well if i get a margin call and i dont get the call & all my assets are sold without a CALL! My document states i am to be Called Not Storm. Then how is that not the bloody banks fault.
Also who was looking after the clients during tha ASIC investigation that were all sold down during this time. Storm were not allowed to. So i guess thats storms fault too. Or who's fault is that.
So yes we all share in the blame ASIC, STORM, CLIENTS, BANKS, & FPA .
The captain of the ship must go down with his ship EC & is responsible for his crew, bit hard to correct when the banks sell everything from under you. Then when it all goes pear shaped lets dig up as much crap on the company as we can.
MMM no one posted about Storm when they were making millions for the last 10 years or more for their clients.

So Swazi is right we all need to stop posting crap about hearsay, untruths etc. Move on. Stop rubbing salt into the wounds of those down and out.
Wish you well Swazi.

Oh thats right we are all just greedy

You're displaying similar tendencies to some of the other Storm clients I've seen interviewed......don't blame the Storm, blame the banks.


You may wish to consider the following points.......

1. Storm should have converted you to cash, or at least advised you to convert to cash, long before you even came close to margin call.

2. Storm clients, as the ones whose investment funds were on the line, should have kept themselves updated on the state of the market and the economy. Yes, I know you thought you'd employed professionals to do this for you, and you assumed they were competent. But a business owner should never take his managers competence for granted......managers need regular monitoring and guidance, they need to be subjected to regular performance reviews. Stockmarket investment is a business investment just like any other kind of business. The same rules apply.

3. It may have been the banks responsibility to advise you when you were in margin call. Or the responsibility may have belonged to Storm. I don't know. But again I refer to point 1 above......your investments should have been converted to cash long before you were anywhere near margin call. And that responsibility rested firstly with Storm, and secondly with you, the clients, if Storm didn't do it.
As the market fell and fell and fell, and the stockmarket and economic crisis were plastered all over the media every single day, nobody, not Storm, not yourselves, nobody, took the prudent action of extracting you from this perilous situation before the value of your investments was completely decimated.


4. Storm geared you to highly risky levels. Worse still, they appear to have had no contingency plan for minimising the risk in the event of the stockmarket changing direction.

5. Storm slugged you heavily with up front fees that were well in excess of what was normal in the financial planning industry.


I don't think pure greed was at play in the case of every Storm victim. Different people, different situations. Some clients were clearly naive about investment matters, and were simply not aware of the risks they were taking. Some were not wealthy people at all, but were just trying to build up a nest egg so they could be self-funded in retirement. I feel truly sorry for these people.

Then on the other end of the scale are the people who were already wealthy when they joined Storm....many houses owned outright, several million dollars worth of assets, enough passive income to retire in comfort. Not only that, but successful business careers behind them. The sort of people who have much experience of life, have invested money for years, and should have at least a reasonable level of investment knowledge, not to mention a fair level of common sense.
It's these sort of people who cause me to shake my head in disbelief when I hear of them putting all these assets at risk by gearing heavily in something as risky as the stockmarket.
One of these people said they were worth more than 4 million when they joined up with Storm, and they got up to a net worth of 12 million.
I find it hard to comprehend why, on the way to 12 million, they wouldn't have paused somewhere, say at the 7 million dollar mark, and thought something along the lines of the following....

'Let's see - we're worth 7 million. If we put half of that into secure assets such as residential real estate in growth areas, and get 5% annual return, we'll have an annual income of 175k, which is enough to live in luxury for the rest of our lives, help our family, go on overseas trips, enjoy life. Not only that, but our real estate will produce solid capital growth over time. We'll leave the other 3.5 million in the stockmarket, but in a conservative way that won't put the rest of our assets at risk'.

When people are set up for life with many millions of dollars in assets, but heavily gear those assets to get even more wealth and income, it begs the question - 'how much wealth and income do these people think they need?

You don't need a crystal ball to know how much money you'll need to live comfortably for the rest of your life. You need a calculator and a bit of common sense.
These people should hardly be surprised or offended when told they were being greedy.

 

[Judd]

to set your mind at ease yes....if a class action is commenced it will be "no win no pay".... I thought that was pretty obvious.... we don't have a lot of spare cash anymore !!!!!

That worries me a little because if you lose and costs are awarded against you...............

But as you say most of Storm's clients no longer have a lot of spare cash.

 

[Solly]

Sixty Minutes tonight: "The Perfect Storm"

Reporter: Ellen Fanning Producer: Jonathan Harley

...."on Sunday night, they'll see Storm's boss face the music.

But it's also the story of the banks and loans that raise serious questions indeed."

Story overview here and transcript will also be posted later here as well.
http://sixtyminutes.ninemsn.com.au/article.aspx?id=757649

The CBA response to 60 Minutes is on the site now..


http://sixtyminutes.ninemsn.com.au/article.aspx?id=757649

 

[mrfmad]

You're displaying similar tendencies to some of the other Storm clients I've seen interviewed......don't blame the Storm, blame the banks.

You may wish to consider the following points.......

1. Storm should have converted you to cash, or at least advised you to convert to cash, long before you even came close to margin call.

2. Storm clients, as the ones whose investment funds were on the line, should have kept themselves updated on the state of the market and the economy. Yes, I know you thought you'd employed professionals to do this for you, and you assumed they were competent. But a business owner should never take his managers competence for granted......managers need regular monitoring and guidance, they need to be subjected to regular performance reviews. Stockmarket investment is a business investment just like any other kind of business. The same rules apply.

3. It may have been the banks responsibility to advise you when you were in margin call. Or the responsibility may have belonged to Storm. I don't know. But again I refer to point 1 above......your investments should have been converted to cash long before you were anywhere near margin call. And that responsibility rested firstly with Storm, and secondly with you, the clients, if Storm didn't do it.
As the market fell and fell and fell, and the stockmarket and economic crisis were plastered all over the media every single day, nobody, not Storm, not yourselves, nobody, took the prudent action of extracting you from this perilous situation before the value of your investments was completely decimated.


4. Storm geared you to highly risky levels. Worse still, they appear to have had no contingency plan for minimising the risk in the event of the stockmarket changing direction.

5. Storm slugged you heavily with up front fees that were well in excess of what was normal in the financial planning industry.


I don't think pure greed was at play in the case of every Storm victim. Different people, different situations. Some clients were clearly naive about investment matters, and were simply not aware of the risks they were taking. Some were not wealthy people at all, but were just trying to build up a nest egg so they could be self-funded in retirement. I feel truly sorry for these people.

Then on the other end of the scale are the people who were already wealthy when they joined Storm....many houses owned outright, several million dollars worth of assets, enough passive income to retire in comfort. Not only that, but successful business careers behind them. The sort of people who have much experience of life, have invested money for years, and should have at least a reasonable level of investment knowledge, not to mention a fair level of common sense.
It's these sort of people who cause me to shake my head in disbelief when I hear of them putting all these assets at risk by gearing heavily in something as risky as the stockmarket.
One of these people said they were worth more than 4 million when they joined up with Storm, and they got up to a net worth of 12 million.
I find it hard to comprehend why, on the way to 12 million, they wouldn't have paused somewhere, say at the 7 million dollar mark, and thought something along the lines of the following....

'Let's see - we're worth 7 million. If we put half of that into secure assets such as residential real estate in growth areas, and get 5% annual return, we'll have an annual income of 175k, which is enough to live in luxury for the rest of our lives, help our family, go on overseas trips, enjoy life. Not only that, but our real estate will produce solid capital growth over time. We'll leave the other 3.5 million in the stockmarket, but in a conservative way that won't put the rest of our assets at risk'.

When people are set up for life with many millions of dollars in assets, but heavily gear those assets to get even more wealth and income, it begs the question - 'how much wealth and income do these people think they need?

You don't need a crystal ball to know how much money you'll need to live comfortably for the rest of your life. You need a calculator and a bit of common sense.
These people should hardly be surprised or offended when told they were being greedy.

I think you need to be corrected yet again My post says
So yes we all share in the blame ASIC, STORM, CLIENTS, BANKS, & FPA . If you care to check.
That was my point entirely this forum is not listening to anything written from storm clients other than what they want to hear or read. Oh and by the way i couldnt agree with your post more. But that wouldnt matter would it.

 

[MR.]

The CBA response to 60 Minutes is on the site now..


http://sixtyminutes.ninemsn.com.au/article.aspx?id=757649

Commonwealth Bank Response to 60 Minutes as per link above:

Commonwealth Bank Response to 60 Minutes:

As explained, the CBA does not believe it is appropriate for a representative to appear on your program.

We are, however, concerned and sympathetic to those who followed financial planning advice from Storm Financial and are seeking to assist them where feasible.

We have already assisted your preparation of your story and are providing the following responses to your questions to assist the accuracy of the 60 Minutes program.

The Bank considers the collapse of the Storm Financial group to be serious, complex, and extremely unfortunate for those involved and the issues of responsibility are matters that are already being tested in the appropriate forums.

A) How/why did were clients sold down in the Colonial Fund? Colonial Geared Investments (CGI)

Since the collapse of Storm Financial, there have been allegations aired in the media that CGI “dropped the ball” in relation to margin calls. These allegations are untrue – CGI kept its part of the agreement in the margin call management process.

It’s important to understand the roles of CGI and Storm Financial (borrower’s financial planner) in the margin loan management process. CGIs role is to keep Storm Financial up to date with the relevant information concerning their client’s margin loan.

The role of the Storm Financial (under the authority of the borrower) is to manage the portfolio regarding the level of indebtedness and the purchase or sale of security.

Storm Financial clients were sold down when Storm Financial advised CGI who and how much should be sold. When the clients’ Margin Loans went into margin call, Storm Financial advised CGI what should be sold / redeemed to clear the clients margin call in full. This process worked well over the past decade. Storm Financial continued to meet its responsibilities even as the market started to fall. In October and November 2008 Storm Financial instructed CGI to effect $672 million worth of sales to address clients’ loans in margin call.

However, as the markets continued to fall, Storm Financial’s instructions became inadequate to clear margin calls. In November 2008, CGI was forced to step in to ensure all margin calls were addressed in full. If this had not happened, Storm Financial clients would have accumulated more losses as the market continued to fall. After attempting to obtain instructions from Storm Financial in line with the practice of the past decade, it became apparent that Storm Financial’s response to size and duration of the market fall was seriously inadequate. CGI formed the view that Storm Financial was no longer fulfilling its role in relation to margin calls.

Under the margin loan, CGI reserves the right, if the borrower fails to address a margin call, to sell down the security on the margin loan. We instructed redemption requests totalling around $178 million of CFS, Challenger and MLC in an effort to clear these clients’ margin calls.

B) Do we have a responsibility to these clients – weren’t they our customers as a result of their Margin Loan being provided by Colonial Geared Investments?

The Bank met its responsibilities to these customers, and our customers also have responsibilities to us. Those responsibilities are governed by the terms of our agreements – in this case the Margin Loan terms and conditions.

Under the Margin Loan agreement, each Borrower expressly authorised CGI to deal directly with Storm Financial in relation to the margin loan and to take instructions from Storm Financial. This is the case with all CGI’s margin loans, not just those of Storm Financial clients. The arrangement reflects the fact that CGI’s margin loan is a product designed to be offered through licensed financial planners and the product model is for CGI to deal with the planner directly.

If borrowers want to deal directly with the Commonwealth Bank in relation to a margin loan, then they have the option of a CommSec Margin loan. (Storm Financial did not recommend the CommSec Margin loan to its clients.) CGI offered the tools through which these investments could be geared – ie the CGI Margin Loan. CGI did not offer any advice; its role was that of lender. All investment advice to Storm Financial’s clients was given by Storm Financial under a formal Statement of Advice. Pursuant to these Statements of Advice, the Storm Financial clients were mainly invested in CFS Funds, Challenger Funds and MLC Index Funds.

CGI had the responsibility of keeping Storm Financial fully updated with data on every margin loan held by Storm Financial clients. We took our responsibilities seriously, providing data to Storm Financial daily on each and every client’s margin loan. On top of this we provided up to date data on our web site (for both advisers and clients) which can be utilised 24/7 to check the clients account. Storm Financial accessed this data over 11,000 times. On two occasions this data did not transfer across to Storm Financial correctly. Storm Financial informed us and we sent a new file immediately.

Our borrowers had the responsibility of monitoring their portfolio and taking any action required to avoid or clear a margin call. At any time, any of these borrowers could have contacted Storm Financial and obtained the current details of their margin loan portfolio from Storm Financial (based on the information CGI supplied to Storm Financial on a daily basis).

C) How Storm clients could take out home mortgages to fund their Storm investments?

Customers use the security of their home loan investment for a number of reasons, including other investment categories.

The Commonwealth Bank provided home loans for Storm Financial clients who applied and met the Bank’s lending criteria. We assume that these customers’ decision to apply for home loans with the Bank was taken on the basis of advice given by Storm Financial.

Any home loan customer of the Bank who is a former Storm Financial client and is having difficulty meeting their home loan commitments should contact the Bank to discuss their options. The Bank has a range of measures available to provide flexibility for borrowers in financial hardship.

 

[Macquack]

You don't need a crystal ball to know how much money you'll need to live comfortably for the rest of your life. You need a calculator and a bit of common sense.
These people should hardly be surprised or offended when told they were being greedy.

I disagree with this statement. I think you do need a crystal ball to know how much you'll need to live comfortably for the rest of your life.

For many investors, Storm provided the crystal ball and sold the intangible dream of future wealth.

...many invested out of fear (fear of having nothing in retirement) rather than greed.

I agree with this. Storm traded on the fear of investors not having enough in retirement if they did not get on the Storm bandwagon.

 

[Solly]

I think you need to be corrected yet again My post says
So yes we all share in the blame ASIC, STORM, CLIENTS, BANKS, & FPA . If you care to check.
That was my point entirely this forum is not listening to anything written from storm clients other than what they want to hear or read. Oh and by the way i couldnt agree with your post more. But that wouldnt matter would it.

I watched the 60 minutes story & have read the response from the CBA.
I'd would never have invested in Storm but that's only as a result my past experiences. Storm's modus operandi would never have passed my smell test.
Two things that I observed tonight were the naivety of Storm clients and the utter disbelief from EC that it all came unstuck. All very sad.

Don't be too hard on yourself, I bet there's many people on these forums, including me that have made major fark ups and could proudly were the Dumbass tag for past less than successful actions and decisions. It doesn't matter what others think about what's happened to you and the other ex clients, it's irrelevant. The only thing that really matters is to seek a remedy that's acceptable to you, keep moving forward, keep your nose up and never, never, never stop until you reach that point.


The three most useless things after you've pass V1 and rotate are the altitude above you, the runway behind you, and a tenth of a second ago.

 

[Julia]

3. It may have been the banks responsibility to advise you when you were in margin call. Or the responsibility may have belonged to Storm. I don't know.

From the CBA statement following the 60 Minutes programme (thanks, Solly) it would seem that all communications to the clients were via Storm, and there was no responsibility for the bank to communicate directly with clients.

That worries me a little because if you lose and costs are awarded against you...............

That's an interesting point, Judd. Storm clients: has Mr Scattini discussed this possible outcome and what would then happen? Would S & G. pay the costs?
(And thanks for confirming 'no win no fee' basis of potential class action.

 

[Julia]

Who watched the '60 Minutes' programme on Storm? What did you think?

It reminded me why I usually take pains to avoid this programme, along with most commercial television.

The reporter did a great job of putting words into the mouths of investors vis a vis the push polling that goes on in surveys for political parties.

That aside, I'm really sorry for the people who clearly were not amongst the greedy and whose lives have been so utterly devastated.

 

[bunyip]

I think you need to be corrected yet again My post says
So yes we all share in the blame ASIC, STORM, CLIENTS, BANKS, & FPA . If you care to check.
That was my point entirely this forum is not listening to anything written from storm clients other than what they want to hear or read. Oh and by the way i couldnt agree with your post more. But that wouldnt matter would it.

Good of you to point out where you think I need to be corrected. You are, however, wasting your time, as I was already fully aware of you having said 'we all share in the blame ASIC, STORM, CLIENTS, BANKS, & FPA'.

I'm also aware that you came across as thinking that people were somewhat unreasonable in blaming Storm.

Furthermore, that you made no mention of the fact that if Storm was on the ball, and if Storm clients were on the ball, margin calls would never have occurred.......clients would have quit their investments long before the situation became catastrophic.

Your agreement with my post is noted. You're right...it doesn't really matter that you agree with me. But it does at least show some balance in your thinking.

 

[Julia]

I disagree with this statement. I think you do need a crystal ball to know how much you'll need to live comfortably for the rest of your life.

Why? There are many retirement calculators on the internet, e.g. via FIDO/ASIC, and most of the banks have these also.
And even without such an aid it's not too difficult to look at the amount of Super you have, allow for it to earn x% p.a., relate that to your life expectancy, and consider whether the resulting p.a. income is sufficient to meet your retirement needs. That will give a close enough estimate to be a reasonable guide.

 

[Macquack]

Why? There are many retirement calculators on the internet, e.g. via FIDO/ASIC, and most of the banks have these also.
And even without such an aid it's not too difficult to look at the amount of Super you have, allow for it to earn x% p.a., relate that to your life expectancy, and consider whether the resulting p.a. income is sufficient to meet your retirement needs. That will give a close enough estimate to be a reasonable guide.

"allow for it to earn x% p.a.". Thats the first use of the crystal ball - guessing the x%.

A second use of the crystall ball is guessing inflation rates into the future.

Sorry, going off topic.

 

[MR.]

60 minutes..........

“But this could have happened to any one of us.”

No. I do not think so.

.

It’s the banks fault for loaning people a lot of money on perhaps low incomes! ..... Or is it?

Four Corners nor 60 Minutes explained this to the masses, so the outcome of the story is a little one sided. I watch these reports and the stories bring up, but do not explain, why or how a bank would loan so much money to an individual.

If someone has $100,000- (in an asset or cash) and the bank was asked for a loan over that $100,000 why wouldn’t the bank loan someone perhaps as much as say $300,000 to invest in equities. So $400,000 can now be invested in equities. The catch being if those equities dropped by 25% (from $400,000 to $300,000) the bank has the right to sell those remaining equities to recoup the debt.

Is this not a fair business transaction?

 

[Glen48]

On the face of it it looks like Storm might have done a bit of Sub prime and altered the incomes to get the applications over the line, EC on 1 hour claims he didn't know wo filled in the application stating an income of 104K surely there must be a signature of the Storm official who did the paper work???
Also how could some one not be asking question went you are geared for 1 or 2 M$?

 

[MR.]

So in addition to my last post above I can only assume:

The banks still have our money and we'll fight to get it back !

No... It appears to me the bank has their money. Your money is lost along with money of mine and millions of others by that invisible hand that hit all equity markets.

 

[MR.]

On the face of it it looks like Storm might have done a bit of Sub prime and altered the incomes to get the applications over the line, EC on 1 hour claims he didn't know wo filled in the application stating an income of 104K surely there must be a signature of the Storm official who did the paper work???

If fraud is involved I hope the outcome brings some justice for Storm's clients even if not financial.

 

[pilots]

So in addition to my last post above I can only assume:



No... It appears to me the bank has their money. Your money is lost along with money of mine and millions of others by that invisible hand that hit all equity markets.

Your post is so true.
To all of you who think they will win against the banks, you are in for a shock.

 

[Solly]

The CBA response to 60 Minutes is on the site now..


http://sixtyminutes.ninemsn.com.au/article.aspx?id=757649

Here's the story on youtube,

Part 1 of 2
http://www.youtube.com/watch?v=4KLUKsI-4Xs


and Part 2 of 2
http://www.youtube.com/watch?v=1T1fscqdPWo

 

[Solly]

"Storm faces start of flood of legal claims"

"CLIENTS of Storm Financial have started lodging legal claims against the failed wealth adviser over the financial advice they were offered."

"Emmanuel and Julie Cassimatis, appear to have received millions for providing the financial software that Storm used to generate the advice."

Full story in SMH by Colin Kruger is here;

http://business.smh.com.au/business/storm-faces-start-of-flood-of-legal-claims-20090301-8lfc.html

 

[Smiley]

If stormified clients take on CBS or BOQ and lose they will be up for legal fees, though one can acquire insurance for such a possibility.

Nothing has happened yet and it will be interesting to see if anyone gets compensation through legal channels.

I take full responsibility for taking their advice; have always budgeted and did not act out of fear but because there were supposed to be trigger points to safeguard us and thought I could thus supplement the pension. I did ask and was told that I would always be taken out to cover the house mortgage. We could have gotten back into the market without fees (as owned brokerage) but Storm did not do . . .

Personally, time to refinance, move on psychologically, emotionally and plan ways to live on the aged pension in a few years as a result of this catastrophe . . .


Here is a good link for range of loans - all banks listed with up to date rates:

http://www.canstar.com.au/